Ruth Ibikunle
The Nigerian stock market last week closed on a bearish note, shedding 0.33%. Year to date, the market has returned 30.40% with the All Share Index and Market Capitalisation at 97,506.87 points and N59.107 trillion respectively.
In a Stock Market Review with the MD/CEO of GlobalView Capital Limited, Aruna Kebira, the following discussed:
Excerpts
• Last week, the stock market closed lower by 0.33%. What is the outlook for the new week?
This week marks the beginning of the last month of the year 2024. The activities of the Yuletide are expected, which is going to be mixed.
On one hand, the period marks a season of reckless spending, where individuals spend without a budget. Spur of the moment and spontaneous spending characterised the period. By extension, we can see a massive sell-down for cash in the market.
On the other hand, we are expecting the Santa Claus rally, which may begin any time of the month. This normally happens to end the year well, sometimes in favour of the portfolio manager positions.
Be that as it may, the ASI would begin to experience preparation for the interaction of both pressures and the more intense one would carry the day. But I expect the market to close the week in the green zone.
• What drives the growth in Sunu Assurance, Haldane McCall, Sovereign Trust Insurance, and NASCON?
Haldane McCall is a new listing. It listed 3.112b units of shares at N3.84 by way of introduction.
Its Q32024 unaudited earnings report shows remarkable growth from an eps of 6k to 16k.
The majority of the shares are still in the hands of investors who will not readily offer them for sale in the near term.
The volume traded in the market is embedded with some crossings to the strategic investor, so the little in the hands of speculators is what is responsible for the up and the down of the stock price.
The stock may be tending to close at about N10.00 for the year but the release of their Q4 AFS and corporate action thereof would determine the next level of the price of the stock.
NASCON and Dangsugar have been waiting on the sideline for the solidification of the business combination between them.
While the waiting lasts, the market has priced down the stock, and while at its almost lowest point, the market considers it cheap and the interest of investors was rekindled especially when we are approaching the end of the year and no one can tell when the news would break.
• FCMB is raising additional funds barely after raising N110 billion via public offer. How attractive will FCMB be after the exercise?
In Corporate Finance, we were told that it is not a sin to borrow to do business, it becomes a sin when the ROI is less than the costs of funds.
My people would say that it is not a sin for a kid to have protruding teeth, both so far as he can develop enough lips to cover them.
Share dilution has been a concern to many analysts and investors alike, but what happens if the additional capital so raised is deployed to judicious and profitable use to the extent that the effect of the dilution on the eps is negated by the increase in the earnings from the business the company undertakes as a result of the availability of the investible funds.
The market would wait for the capitalization of these funds and the corresponding earnings report and would reprice the stock accordingly.
• Is MTN a good buy at N170?
We should recall that the last MTN public offer in December 2021 was at N169.00. So at N170.00, the stock of the company should be attractive, But it should also be noted that the effect of the exchange differential in their balance that has forced them on their financial knees is still very much around and not over yet.
But after the rain, comes the sunshine. MTN has the potential and the fundamentals to get over this and when that happens the investors who took position at the current price would be coasting home with their profits.
• Oando gained 6.65% last week to close at N64.95. How sustainable is this growth?
Oando, a company that has nine lives like a cat would never stop to amuse both speculators and investors alike.
The market is waiting for the next big corporate action that would trigger a rally or a depression of the price of the tock.
The market is anxiously waiting.
• Why are LASACO and Seplat trending down?
Lasaco released an impressive Q42023 earnings report and the market moved in that direction and was expecting a corresponding corporate action.
The failure of such is what has been responsible for the downward movement of the stock.
Seplat’s price decline could be attributed to a run-of-the-market. Those who took positions in other advancing stocks may need to sell to cover their position and in that desperate move, the seller would release the volume to the market not minding what happens to the stock price as far as his position is appropriately covered.
• What are the stocks to watch?
HMCALL, Tantalizers, Wapco, Access, Ucap, Transcorp, and a host of others